In Praise of the Per Diem
Money. Personal finance. FIRE.
If you zoom out far enough, it’s all a game.
And I mean that in the best possible way.
Achieving FIRE? Fun.
Staying FIRE? Also fun.
Honestly, it’s one of the most engaging, rewarding “games” I’ve ever played.
And one of my favorite ways to play it?
The per diem.
Each year, I set a spending budget based on my target withdrawal rate.
Then I divide that across 12 months.
Simple enough.
In the past, I would also try to account for “lumpy” expenses—home insurance, property taxes, car maintenance… the usual suspects that show up, punch you in the face, and disappear for another year.
This year, I changed the rules a bit.
Instead of trying to smooth those out, I pulled major known expenses out of my liquid net worth first… and then calculated my spending budget from what remained.
Quick example:
Let’s say you’ve got $1.1 million in liquid net worth.
You know you’ve got about $100K in big, one-time or infrequent expenses coming up.
You could run a 5% withdrawal rate on the full $1.1M and get $55K.
Or… you take the $100K off the top, run 5% on $1M, and land at $50K.
Same math. Different mindset.
That said, I left all other “lumpy” Expenses in this year … car insurance, Property taxes, etc. Therefore my Annual, Monthly, and Per Diem budgets must cover these
(I do allow for “roll Over” dollars - e.g., March was below budget, those Dollars were added to April, et.c)
To get to my Annual, Monthly, and Per Diem budget, I only took out very Large anticipated payments ($24,000 for Income Taxes, $15,000 for a College Expense)
(And yes—you don’t want to get too cute with how many “lumpy” things you carve out. But if you’ve got margin, it’s an interesting lever to pull.)
All of that is setup for why I really like the per diem approach.
Because this is where it turns from math… into a game.
I think this idea first clicked for me years ago.
A group of my friends and I had parents who worked for an airline. After high school, we could fly to Hawaii, for a very low cost, during winter break—10 to 14 days at a time.
It was amazing.
Also… I had basically no money.
Once the hotel was covered, I had about $50 a day.
That was it.
And suddenly, every decision mattered—in a fun way.
Groceries instead of eating out.
Maybe one nice dinner.
Pick your “big” activity carefully—like renting mopeds for a day.
It became a game:
Can I make it through the trip without running out?
And the funny thing?
That constraint didn’t make the experience worse. It made it better.
Simple. Focused. Intentional.
That feeling—that freedom—is a big part of what I still love about FIRE.
Now fast forward to today.
April?
April came in hot.
Even after setting aside money for taxes… I underestimated them by about $7,000. Always fun.
On top of that:
Annual home insurance
Bi-annual car insurance
Property taxes
A couple of weekend trips
And a steady stream of “hey, let’s go check this out” events around town
Translation: a very lumpy month.
So here we are—with about six days left…
…and roughly $75 per day left in the budget.
Now that’s a game.
Can I land the plane without going over?
We’ll find out.
Same thing is happening on the health side.
Earlier this week, I realized I was averaging about 400 calories per day over my monthly target.
So what did I do?
Adjusted the per diem.
Bring it down to a level where—if I stick to it—I still hit the monthly goal.
Result so far?
That overage has already dropped in half.
And as a nice side effect:
Weight moving in the right direction
Musical mass (yes, that’s a thing now) moving in the right direction
Not bad.
So yeah… I’m a fan.
The per diem turns abstract goals into daily decisions.
It gives you feedback in real time.
It adds just enough constraint to make things interesting.
And most importantly?
It makes the whole thing more fun to play.
Praise the per diem.
Use it wherever it fits.
Life’s a better game when you can actually see the scoreboard.